EIA is preparing for the second attempt to investigate bitcoin miners on electricity consumption

Dive assignment:

The US Energy Information Administration wants to investigate cryptocurrency miners about their energy use and plans to publish a notice in the Federal Register this quarter to comment on the proposed data collection. EIA began collecting data on crypto energy use in February under an emergency authorization from the Office of Management and Budget. The Texas Blockchain Council sued EIA for advancing the survey without a full review and, the group said, because some questions were directed at proprietary data. EIA subsequently retracted the survey and agreed to destroy any data it collected. EIA’s preliminary estimates indicate that electricity used for cryptocurrency mining likely represents between 0.6% and 2.3% of total U.S. electricity consumption, Steve Harvey, senior adviser to the EIA administrator, said Wednesday in a conversation with the crypto industry said. “It’s an important piece, and suggests understanding that it could be important as we go forward,” he said.

Dive Insight:

Wednesday’s discussion was billed as a “listening session” and a chance for EIA to comment on what kind of data it can collect from the crypto industry. Stakeholders made recommendations as well as thoughts on the first attempt at data collection.

There is some concern in the crypto space that data EIA collects might be “weaponized,” said Tom Mapes, founder and president of the Digital Energy Council. The industry was concerned about the way the February survey was rolled out and appreciates the “more transparent process,” he said.

Miners are “wary of the motivation behind the EIA data collection efforts,” said Margot Paez, a doctoral student at the Georgia Institute of Technology, where her research focuses on bitcoin’s energy use and environmental impact. She is also a research fellow at the Bitcoin Policy Institute.

“I believe we need a proper study, but I also think the EIA is the wrong organization,” Paez said. “The only way to get buy-in in the industry is to contribute [the survey] to effective third parties. Therefore, I propose that the EIA support a university-led initiative that will direct our research laboratory at Georgia Tech.”

There are growing concerns about the energy consumption of cryptocurrency, particularly bitcoin and its “proof of work” method of validating transactions, which require large amounts of electricity. Opponents say mining threatens grid stability, while the industry focuses on crypto’s potential to spur clean energy development and the flexible nature of mining loads that can be used for demand response.

“I do think that the bitcoin mining industry would be open to sharing information with the EIA or with a university-led study,” said Texas Blockchain Council founder and president Lee Bratcher. “The more information is shared, the more our opponents will realize that this industry has tremendous benefit, not only for incentivizing renewable generation, but also as a capacitor for grid stabilization and frequency balancing across the country.”

The “full story” of crypto mining includes a discussion of the “energy infrastructure opportunities this industry brings,” Mapes said, “especially the flexibility around demand response.”

Experts say providing services to the electrical grid can generate anywhere from 2% to 10% of a bitcoin mine’s revenue.

“Unlike traditional data centers, bitcoin has well-defined limits on demand,” Paez said. “What is missing is an understanding of how the protocol controls energy consumption. You have to understand how the difficulty adjustment works, and that there is a separate market for computing power… which makes reducing electricity costs the main way miners can compete.”

Total U.S. data center electricity demand could double by 2030 to consume 9% of U.S. electricity generation, the Electric Power Research Institute found in a May study. The increase is driven by AI applications, which can require 10 times the electricity of traditional internet searches.

Surveying data centers in general, as opposed to crypto-specific data centers, “would have been a better approach,” Bratcher said. “And distinguishing between flexible data centers and non-flexible data centers would be a good way to understand the difference between bitcoin mining data centers, AI cloud computing data centers, etc… There are a fair amount of differences, but From From an EIA perspective, it seemed strange to us that bitcoin mining was singled out.”